Telecom Italia rebel shareholder won't give up fight to keep Brazil unit

The long-running Telecom Italia saga took on a further twist this week after rebel shareholder Marco Fossati reportedly redoubled his efforts to prevent a sale of Tim Brasil, which he regards as crucial for the future of the Italian incumbent.

Apparently undeterred by his failure late last year to gain shareholder approval for the removal of Telecom Italia's entire board, Fossati has claimed that the Brazilian unit is worth more than €30 billion (US$40 billion), Reuters reported.

"In evaluating any possible acquisition proposal, the board will have to operate very carefully," Fossati said in a letter to the group's board that was seen by Reuters.

Reuters added that a study included with Fossati's letter gave Tim Brasil a standalone value of €17 billion ($23 billion), but Fossati claimed that other factors such as growth prospects, cost savings and other sales benefits for rivals would drive the value to as much as €30 billion.

In December Fossati, who holds a 5 per cent stake through his holding company Findim, told Reuters he planned to continue his fight to weaken the influence of Telefónica within the group. Fossati and other rebel investors believe that Telefónica, which has agreed to a gradual takeover of Telecom Italia through the Telco shareholder vehicle, could force a sale of Tim Brasil to strengthen its own Vivo unit in the South American country.

Only last week, Telefónica was forced to deny a report that it was planning to set up a joint vehicle to buy and then break up Tim Brasil together with local rivals América Móvil and Oi.

Telecom Italia CEO Marco Patuano is understood to be against a sale of the Brazilian unit, but speculation that the $13.7 billion business is for sale refuses to die. Telecom Italia owns 67 per cent of Tim Brasil.

Meanwhile Telefónica remains under pressure in Brazil following its move to increase its influence over Telecom Italia via Telco, which holds 22.4 per cent of the Italian operator. Brazilian competition watchdog Cade last month told Telefónica it must exit its direct and indirect stake in Tim Brasil or reduce its stake in Vivo.

The next developments are expected to come on Thursday, when Telecom Italia is due to hold a board meeting.

For more:
- see this Reuters article

Related Articles:
Telefónica denies involvement in Tim Brasil breakup plan
Report: Telefónica plans Tim Brasil sale as Telecom Italia plots defence strategy
Telecom Italia board survives shareholder vote
Telecom Italia board awaits its fate at shareholder meeting
Telefónica between a rock and a hard place on Brazil

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